Ensuring Network Stability and Consumer Confidence
in Competitive Markets
Summary
Proposals to limit quality of service differentiation or mandate non-discriminatory treatment of network
traffic may have the unintended consequence of harming consumers and curtailing innovation and
investment in Internet-based services. We reaffirm our support for the transparency principle, to
ensure that consumers are clearly informed of their service capabilities and uses and level of service
quality that they should expect (as expressed in the Universal Service and e-Privacy Directives). And,
we agree that consumers should be able to access any content on the Internet and run any application
and device that they choose. There is no question that this ability has and will continue to be
fundamental to the Internet’s success. But, critically, this should happen without prejudicing network
stability and consumer confidence, allowing the operator to manage congestion and capacity
constraints on a secure network.
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Network management tools include the prioritization of traffic over networks. Without adequate
management, operators today would not be able to increase network stability, including efforts to:
a) ensure consumers have a good connection when congestion occurs in the network; b) block
spam emails; c) manage network traffic to assure that specific user behavior does not unfairly
affect the quality of user experience for others; d) enable real-time home medical monitoring; e)
deliver the highest quality IPTV experience; and f) enforce parental controls to protect minors from
inappropriate online content.
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The internet has grown and developed in an open environment characterized by competition,
cooperation and adaptation. Legislating minimum quality of service levels or mandating nondiscriminatory treatment of network traffic in the Directives would reduce innovation and ultimately
consumer choice at all levels of the internet. New advances, like those in telemedicine, would be
severely hampered without the ability to offer specialized connections.
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The competitive market for network services in Europe already guarantees customers adequate
competition, transparency and choice of service plans. Mandated service levels would not
enhance consumer rights. To the contrary, it would lead to decreased flexibility and less effective
network management, and thus, reduced choice for consumers.
What do customers expect when they log on?
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Meaningful Transparency – That they will receive adequate information about the products /
services they purchase in order to make the choice most appropriate to them (including, for
example, such elements as relevant rates, terms and conditions, or any limitations that apply).
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Responsible behavior – That service providers and others in the Internet value chain will act
responsibly in the broadband world or be held responsible by the relevant regulatory authorities.
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Continuous Innovation – to preserve and improve the quality of the user experience, ensuring:
- That Internet mailboxes will not be overstuffed with spam.
- That users’ online experiences will not be unfairly degraded or disrupted due to
congestion from the online activities of their neighbor next-door.
- That the services they pay for will not be susceptible to a variety of online attacks or other
threats from malware of various kinds.
- That the market will continue to offer new and differentiated services and content.
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Choice – When consumers have meaningful information about the nature of their broadband
services and the practices of their providers, in a competitive market, they will choose their own
‘winner’ in the marketplace according to their own needs and budget.
“Innovation Happens” – Users expect it – that is, until something prevents it from happening. Policies that
impose regulation where there’s never been a demonstrated problem requiring government intervention will
discourage the continuous innovation and choice that today ensures network stability, consumer
confidence and a high quality user experience.
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What is Network Management?
The Internet is a network of networks, where traffic is exchanged in “thousands of handshakes” that take
place by mutual agreement among the more than twenty thousand networks that comprise the Net. It’s also
a global marketplace for network resources and capabilities. As this market handles ever-increasing levels
of traffic, the exercise of effective network management consists, first and foremost, of cooperative efforts
between carriers in the value chain to deal with challenges such as spam and congestion.
Each network employs management tools that are the products of continuous technical innovation by
network operators, engineers and communications equipment manufacturers. These tools may prioritize
traffic on networks and, by their very nature, ‘discriminate’ among the various bits that make up typical
Internet traffic, in much the same way that traffic signals at intersections in a busy city center discriminate
momentarily in the interest of a better overall flow of traffic. Such discrimination occurs according to source,
destination, or type of application, in order to provide a quality service, not to detract from a user
experience or access to content. Network management, using intelligent technical tools within the
network, helps to address issues such as:
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“Packet loss” – oversaturated network elements that may drop packets, which causes the
receiver to request retransmission, which contributes to greater congestion
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“Latency” – delays in packet delivery due to distance and queuing
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“Jitter” – variable latency due to congestion
Some network architectures have clear benefits over others, but all networks are designed on a premise of
shared bandwidth with capacity limits. Some real-time applications – IPTV, VoIP, online gaming, video
conferencing and medical monitoring, to name but a few – demand very high service quality and are
especially vulnerable to problems caused by congestion and/or rapid changes in bandwidth demand.
Recent industry innovations have underscored the value of cooperative efforts between stakeholders in the
Internet value chain to improve overall efficiency in the use of scarce resources. For example, a voluntary
industry group known as P4P has found that, by sharing routing information between networks and peer-topeer application providers, they are able to reduce the network capacity required for file-sharing applications
by 600 percent. This kind of cooperation can create a win for everyone – reduced costs for network
operators, a better product for application providers and a better experience for consumers.
How do consumers benefit from network management?
‘Net neutrality’ advocates typically suggest that what the Internet really needs is a first-in-first-out traffic
model of packet delivery – an ‘all bits must be treated the same’ approach. This would be a radical change
– the medium simply has never worked that way. By prohibiting the beneficial differentiation among different
types of network traffic, or forcing network operators to pre-justify use of certain technologies, many network
responses to real consumer needs would cease or be far less effective.
― For consumers, for instance:
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Blocking spam or phishing emails and distributed denial of service attacks
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Using parental controls to protect minors from inappropriate online content
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Delivering the highest quality IPTV experience, seamless video and interactive conferencing
solutions
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Managing network traffic to assure that specific user behavior does not unfairly affect the
quality of user experience for others
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Enabling real-time home medical monitoring
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Fostering teleworking and telepresence
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Facilitating multi-player interactive gaming
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Improving the quality and reliability of VOIP services
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Providing virtual private networks (VPNs), which allow business and institutional users to
send their data through the Internet with the same guarantees of bandwidth, and the same
security and privacy that they have previously obtained from dedicated, hard-wired circuits.
The Internet has grown and developed in an open environment characterized by competition, cooperation
and adaptation. Many of the ‘net neutrality’-related concerns regarding network management tools simply
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ignore the fact that operators today already operate in this highly competitive environment. In this
environment, while it is uncertain which new and innovative services will succeed, customer choice and
quality of service are key to the survival of market participants. At the end of the day, consumers will
be best served by having multiple broadband platforms competing, with a wide range of business models
and services differentiating competitors. That’s why policies encouraging broadband deployment and
market-based solutions will continue to be the best way to ensure that happens.
What have European officials said about competition and network stability?
The Council and the Commission, in a declaration made in May 2008, signaled their commitment to deploy
high capacity infrastructure to improve health and social care in Europe. Improved fixed and mobile
broadband connectivity can bring extraordinary benefits to patients through telemedicine and real-time
medical monitoring and consultation, advances which would be severely hampered without the ability to
offer efficient network management and specialized connections.
EU law in fact already recognizes that ‘discrimination’ that benefits users, in the form of quality of service
differentiation, is not only permissible, but desirable. As the Commission stated recently, “in the EU, product
differentiation has been considered generally beneficial for the market so long as user have choice to
access the transmission capabilities and services they want.”1 The Commission added that “allowing
broadband operators to differentiate their products may make market entry of content providers more likely,
thereby leading to a less concentrated industry structure and more consumer choice.”
In any market, even those that are operating effectively, there is always the possibility of bad actors and
questionable practices. Various tools are available to deal with these problems, including consumer
protection laws, self-regulation by responsible firms and case-specific, ex-post enforcement by regulatory
and competition authorities. If any anticompetitive discrimination at wholesale level were to occur, it could
be dealt with swiftly and effectively.
“Regulation should not be developed to prospectively address hypotheticals. The discriminatory
practices alleged [by Net Neutrality proponents] are not occurring in the market, but if or when
they do, we [EU regulators] already have the tools to address them quickly and decisively.”
Dougal Scott
Director of Policy Development, U.K. OfCom
London Business School, May 2006
In the course of its review of the Electronic Communications Framework, the Commission agreed. “The
competitive markets together with the current provisions on access and interconnection should be sufficient
to protect “net freedoms” and to offer a suitably open environment for both European consumers and service
providers.” 2 A competitive market with transparent offerings (provided for under Directive 2002/22/EC)
should ensure that end-users are able to access and distribute any lawful content and use any lawful
applications and/or services of their choice (provided for under Article 8 of Directive 2002/21/EC), without
prejudice to network stability, innovation and the integrity and security of services.
Conclusion
We agree that consumers should be able to access any content on the internet, and run any application and
device that they choose. But, critically, this should happen without prejudicing the ability of fixed and mobile
network operators to manage congestion and capacity constraints on a secure network, or the market’s
ability to experiment with new ways to organize and provide services.
We do write in-part, however, to affirm our continued support for the transparency principle, which would
ensure that consumers are clearly informed of their service capabilities and uses (as expressed in the USD
and Privacy Directive). Improved and meaningful transparency of service terms, conditions and limitations
should be the goal of all network, service and content providers. This is guaranteed by the proposed
Directives – enhancing the transparency of prices and conditions and the quality of information that
consumers receive about their contracted services.
With this in mind, it is our firm belief that proposals to mandate quality of service levels or require nondiscriminatory treatment of network traffic would not only adversely impact the quality of service received by
consumers today, but it would also reduce future innovation and consumer choice. Creating new regulation
1
Commission Staff Working Document – Impact Assessment, SEC(2007)1473 [SEC(2007)1472, page 91].
2
Commission Staff Working Document – on the Review of the EU Regulatory Framework, SEC(2006)816, page 32 §9.2.
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today to address a potential concern that has yet to manifest in the marketplace won’t prevent some market
participant somewhere someday from perhaps doing something bad with otherwise good technology.
However, a competitive market where innovation is permitted to continue will mean more options for
consumers and more opportunities for new investments, new business models and new services.
Respectfully submitted,
representing all leading broadband cable TV
operators and their national associations
throughout Europe: www.cable-europe.eu
the principal policy group for European
electronic communications network
operators: www.etno.be
With any questions, comments or requests for meetings with regard to this paper, please email:
[email protected].
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